Kenny: 'Mad' borrowing sparked crisis
Ireland’s economic crisis was caused by people’s "mad" borrowing, Taoiseach Enda Kenny has told the Davos global gathering.
In a discussion on ways out of the country’s worst recession on record, Mr Kenny told the summit in the Swiss Alps that easy credit spawned greed.
“What happened in our country was that people simply went mad borrowing,” Mr Kenny said.
“The extent of personal credit, personal wealth created on credit was done between people and banks – a system that spawned greed to a point where it just went out of control completely with a spectacular crash.
“The country borrowed over €60bn at excessive rates and the IMF eventually came in with the Troika.”
Opposition parties said the comments, made at the World Economic Forum, are at odds with the Taoiseach’s assessment in a pre-budget address to the nation last December when he said: “Let me say this to you all: You are not responsible for the crisis.”
Padraig Mac Lochlainn, Sinn Féin TD, said it was an outrageous analysis and accused the Taoiseach of blaming the people for a crash caused by aggressive lenders and greedy banks.
“He gave an address to the Irish nation in December, telling us it was not our fault, but to say this today was an absolute contradiction,” said Mr Mac Lochlainn.
“This analysis that people in Ireland went drunk with credit, were reckless and they have to now be cleansed by a decade of austerity to clean them of their sins is very worrying.
“People were aggressively cajoled, every time you opened your newspaper or put on your TV. What you had was aggressive lending by the core banks that toyed with low interest rates. It was like crack cocaine.”
Mr Mac Lochlainn claimed Mr Kenny was feeding into a Franco-German propaganda of justifying austerity in Ireland.
A spokesperson for the United Left Alliance said: “Ordinary householders borrowed because of the excessive price of houses.
“The ULA puts the blame squarely at the foot of developers, bankers and speculators who conspired to create massive and for them, highly profiteering, and there was a bubble in the market.”
During the discussion on the catastrophic boom and bust, the Taoiseach said that people in Ireland have since refocused on what they can do to help recovery.
“People have refocused on their values, on what it is they want to contribute to the wellbeing of the country,” he said.
Mr Kenny said it was important to interact with the public and explain measures being taken under the International Monetary Fund-European bailout deal.
“But people become frustrated if they don’t see results and they want to see where the light shines,” he warned.
Mr Kenny was taking part in a plenary session with European Commission President Jose Manuel Barroso, Finnish Prime Minister Jyrki Katainen and Polish President Bronislaw Komorowski.
Meanwhile, the Taoiseach insisted Ireland would not be rushed into selling off state assets to raise €2bn-€3bn to ease the debt crisis and create a fund for jobs.
He went on to describe a €3.5bn bond switch, which was this week secured for the first time since 2010, as “a small sign of confidence” that Ireland was returning to the international markets.
“That’s only a small step in what’s a very long journey for us,” he said.
This was Ireland’s most significant move since bond auctions were suspended more than a year ago and the IMF, European Central Bank and the European Union - known as the Troika – stepped in to oversee the €85bn bailout.
